A six-figure salary is something many of us dream of making! However, a $100,000 salary in the US, in this day and age, may not stretch as far as you think.
As it stands, $100,000 per year is likely to provide comfortable living for single people or couples across many US states. However, cost of living can vary from area to area, and inflation is always likely to fluctuate. Let’s take a closer look at how far $100,000 can stretch, and how you can start earning six figures sooner rather than later!
So let’s dig a bit further – is $100k a good salary in the US or should you be earning more? Is six figures good?
What’s considered a good salary in the US?
Before tax, a good salary in the US is likely to start at $70,000. This generally applies to most states, but affluent areas will increase your cost of living. This rate of pay is higher than the average salary US citizens can expect to earn nationwide.
This rate is likely to be comfortable for single people and couples. For families of three or more, you’re likely to need around $90,000 to $100,000 as a household.
Factors that can impact whether or not you have a ‘good salary’ for your needs include the following:
Cost of Living
If you’re living in a Californian city as opposed to residing in the suburbs of Texas or Alabama, you’re likely to spend more money just to keep the lights on. Living wages in metropolitan areas will be much higher to compensate for this.
Rent, food, energy bills and transportation will all define whether or not you need to earn more than the $70,000 as defined above. If you are a renter, in some cases you will have to demonstrate that your income is at least 3x the monthly rent payment. In such situations, with a salary of $100k before taxes, your ability to rent properties will be limited to those with a monthly rent of roughly $2,800 or lower.
Of course, the size of your family will impact how much you need to earn. I’ll cover this in a little more detail for you below, but it’s simple math! If it’s just you and a partner, you’ll spend less, hypothetically, than if you have two to three children to feed and clothe.
Taxes, of course, are where things can get a little tricky. The salaries I’ve discussed thus far are before you pay the IRS. The more you pay, too, the higher your tax bracket. If you earn $100,000 per year, you’re paying around $24,000 of that to the taxman – and that’s just based on current rates and figures. If you earn bonuses on top of that, your tax rates can climb quite quickly!
Your mileage may vary based on the state you live in, whether you are married or not, and whether you have any other deductions that you can claim. Being married can make a big difference on your income tax bill, as opposed to being single – often by a couple of thousand dollars!
If you own a house, you also have to remember that you will likely owe property taxes, which can be quite hefty in some areas.
Is $100,000 a year considered rich?
Sadly, $100,000 a year isn’t considered ‘rich’ – if you mean completely financially free! It’s extremely comfortable for single people to live on in poorer states and areas, but even then, costs are rising, and your living demands could change at any time.
Before we go further – it’s important to define the difference between your income and your net worth. In order to be rich, not only do you need to have a high net worth, but you also need to have income level.
‘Rich’, or at least ‘wealthy’, doesn’t appear to be a status you can achieve until you have almost $2 million in the bank! That’s according to the Modern Wealth Survey, which takes into account opinions of working people and families across the US.
You also need to take a look at who are the highest earners in the country, and what percentage they make up nationwide. For example, to be in the top 1% of earners in the US, you’d need to be making anywhere from $350,000, if you live in West Virgina, to over $900,000 if you live in Connecticut. And yes, I’m talking about how much you need to earn each year!
Unfortunately that $100k a year of salary may not even get you into the top 10% of America’s highest earning people.
So, $100,000 per year is respectable – and may be very comfortable for lots of people and families across America – but it’s sadly not what you’d call ‘rich’. However if you invest your money regularly, you might well be on your way to becoming a millionaire. But sadly, perhaps not a billionaire, just yet!
What’s the median household income in the US?
The median household income in the USA, according to the government census, is between $70,000 and $71,000. This is likely to change year on year, but it’s a fairly safe benchmark to work to. If you earn more than this, congratulations – you’re ‘above average’ as far as US earnings are concerned!
However, again, you’ll need to consider the media income for your state or region. The median household income in New York state has teetered between $60,000 and $73,000 for a few years now. In Mississippi, this is much lower – it’s averaged between $36,000 and $46,000 for ten years. That’s almost half by comparison!
So, it’s healthy to look at the cost of living expected for your state. If you’re making $80,000 as a single person working from home on a job based in New York, and you move to Mississippi, you’re likely to feel the comfort!
Is $100,000 enough for a single person to live on?
This depends on the state you live in, the home you own or rent, and your average living expenses. Let’s take a look at what you can expect to pay, on average, nationwide – as a single person.
Expenses for a single person in the US
On average, you’ll probably expect to pay anywhere between $5,000 and $6,000 per month as a single household in the US. This is in line with cost of living increases, and takes all states into account.
Your expenses, too, are likely to vary compared to a family of four – but the stats still show that most of your money is likely to get spent on housing. That’s around 29% of your income, with around 14% accounted for as transportation costs. Groceries and healthcare, surprisingly, make up around 7% each.
This monthly rate means you’re likely to spend between $60,000 and $70,000 per year – that’s as a single household, however, which means your tastes and needs will (hopefully) demand much less financial attention!
That doesn’t account for any emergencies (though around 7% of income is accounted for as healthcare). It certainly doesn’t leave you much to save each year – so on $100,000 on your own, you may have an extra buffer of $30,000, depending on where you live. Again, you may well spend less as a single person, so you have an even larger buffer.
Is $100,000 enough for a family of four to live on?
This gets trickier for larger families – families of four based on an average household earning of at least $70,000 isn’t going to travel too far if you’re spending double (or quadrupled) that of the single person above.
As the $100k salary after taxes will only be worth $70k, you will likely need an additional income to support the other higher end needs or wants in life, such as school supplies, medical supplies and health insurance, clothes, vacations and meals out.
Again, you’re really going to need to look at your average family income compared to cost of living per state. For more detail, it’s a good idea to check out Sofi’s guide to the cost of living for each state. Their in-depth calculations should offer some idea of what you need to earn – and/or what you may need to cut back on to thrive.
Where’s the best place to live on a $100,000 salary?
The best cities and regions to live on a $100,000 salary really vary from year to year! Forbes, for example, reported in 2022 that North Carolina appears to be the cheapest (and still pleasant) state to live in. Areas such as Charlotte, Raleigh and Greensboro appear to have comfortable weather and relatively low cost of living compared to many locales.
However, the same report suggests that Columbus, Georgia, Mobile, Alabama and Norfolk, Virginia, are all likely to get you plenty of mileage out of $100,000.
Time Out, meanwhile, suggests that monthly expenses and house prices in Wichita, Kansas, are surprisingly low. Here, a salary of $100,000 will pay two-thirds of your way to a home purchase – if, of course, you spent nothing else!
The same guide also recommends Albuquerque, New Mexico, and Milwaukee, Wisconsin, as affordable places to live if you make $100k. Plenty to choose from!
How can I make more than $100,000 per year?
Unfortunately, the easiest way to make reach that six figure target of $100k per year is to train in a high-demand profession! You don’t have to be a graduate of Harvard or Brown, however, to get into a highly paid position.
With a year of training plus, you could start earning this level of salary working as a computer programmer, web designer, writer / editor, real estate agent, or network specialist. Not all of these roles require specific education – meaning you could start making big money if you think outside of the box.
With a college education, you can make $100k+ with roles in HR, sales, network architecture, film editing, software development, and even managing funeral homes. The choice is yours.
Sadly, while $100,000 sounds like a lot – it will only ever go so far! Check your cost of living based on where you live, and consider scaling up your career – it’s never too late to make a change or two.